Sub-Committee B (Energy, Industry and Transport)
of the House of Lords Select Committee on the European Union is
undertaking an inquiry into the Future of European Aviation Relations
with the United States of America (US) and Other States.

On November 5th the European Court of Justice (ECJ)
issued its long-awaited judgments in the so-called "open
skies" cases. These concerned two separate legal issues.
First, whether it is the Community or individual member states
which have competence to negotiate air services agreements with
other states. Second, whether existing "nationality"
clauses in air services agreements infringe Community law on the
right of establishment.

On the competence issue, the Court held that states
do have the right to conclude bilateral air services agreements,
except when they deal with certain areas such as air fares within
the European Union (EU), which are the preserve of the Commission.

On the second issue, the Court held that nationality
clauses in the bilaterals with the US, which limit designation
to airlines "substantially owned and effectively controlled"
by nationals of the two signatory states infringe Article 43 of
the EC Treaty on the right of establishment.

In response, the European Commission (EC) has called
on EU member states to revoke their aviation agreements with the
US and to give it (the Commission) a negotiating mandate to conclude
an EU-US air services agreement.

Evidence is invited on the issues raised by the Court's
decision and the Commission's response to it.

In particular, the inquiry will be seeking answers
to the following questions:

(1) What action should EU Member States take
to ensure that existing Bilateral Air Transport Agreements conform
to the ECJ judgments?

(2) Should the United Kingdom (UK) Government
and the other EU Member States be encouraged to give a mandate
to the European Commission to negotiate an EU-US air services
agreement?

(3) What practical difficulties would the Commission
face in undertaking such a mandate? How could they be overcome?

(4) Would an EU-US agreement lead to improved
air services and wider choice for UK, EU and US travellers?

(5) What are the longer-term implications of
the Court's decision (on nationality clauses) and a possible EU
negotiating mandate on the UK's air services agreements with states
other than the US?

(6) Will the relaxation of the nationality rule
facilitate airline consolidation in Europe through cross-border
acquisitions and mergers? Would such consolidation be in the
interest of UK and EU air transport industry?